5 min read ⌚
Use Data to Build a Better Startup Faster
Do you want to start your own business?
Before you do, read the advice that follows. It will make your path so much easier.
Who Should Read “Lean Analytics” and Why?
“Lean Analytics” is a guideline that will show you how you can successfully build a startup from the ground up.
It focuses on how you can gather and use data, expressing it through effective metrics, that will help you evaluate your current position and help you grow your business.
We recommend it to all readers interested in starting their own companies, or those who are already managing a business and would like to find a rational approach to doing it successfully.
About Alistair Croll and Benjamin Yoskovitz
Alistar Croll is an author, speaker, and an entrepreneur.
Benjamin Yoskovitz is a speaker and entrepreneur. He is mentoring several start-ups.
“Lean Analytics Summary”
Nowadays startups are such a big deal.
But what exactly is a startup?
Startups are organizations which are created with the objective to build a sustainable business model.
If you have wished to open up a startup yourself, you need to gather data.
In fact, data is crucial to any business – it is numerical information that shows you the behaviors of your customers, your profits et cetera.
If you are an investor, you would have to have enough data as well, in order to know whether your investment pays off.
Data is objective, and it does not allow one to delude him or herself. If you do not have evidence that your idea will work, can you really convince investors to put their money in it?
The biggest enemy to your start up’s survival is yourself. Believing too much in it is just as bad as not believing in your dreams at all.
Because too much passion and hope can make you see distorted images of the reality. You may see what you wish to see, and not what really is.
So, it is essential to stay real and rational.
This is the role of data – it helps you make better and wiser decisions.
Of course, we are not saying that you should blindly follow data. If you do not take a leap from time to time, you will never achieve excellence.
What you should be is data-informed, and then based on your knowledge you should take calculated risks.
We will not lie to you, data is essential, but sometimes you can fall into the trap of becoming addicted to analyzing it.
So, the best approach is always the balanced one. Do not become a slave to the information you gather.
Instead, use them and remember that they are just another tool for achieving your goal.
Up until this point we talked rather vaguely about the reasons why data is important, didn’t we?
Let’s take a closer look: what can data tell you?
Data should pinpoint the right market and the right product you should focus your attention on.
It will show you the preferences of your customers and their buying behavior. It is also a tool which you can use to measure your success and express it in numbers.
But, in order to be effective, all data needs to be expressed in good metrics.
Good metrics share three characteristics: they are understandable, comparable, and are effective when shown as ratios.
So, people should be able to understand and remember the metrics. You do not want to spend too much time on deciphering data.
It needs to be simple and easy to grasp for everyone that sees it.
Next, good metrics allow you to compare different groups of competitors, consumers, time periods et cetera.
Lastly, good metrics are best used as ratios. Ratios are comparable and easy to act on.
Okay, now that we discussed data, we can move on to the start-up development process.
The Lean Analytics framework argues that startups progress moving through five different stages: empathy, stickiness, virality, revenue, and finally – scale.
Empathy is the stage where you identify the prospective customers’ needs. This is the stage in which you find out the direction you will be working towards.
The next stage is the one where you find the way you can satisfy those needs, and make your customers pay for the solution.
The virality stage is the building stage, where you actually construct a product.
Furthermore, in the revenue stage, your business matures and grows.
Lastly, in the scale stage you are trying to scale up, or in other words, enter a new market or expand in the current one.
Each startup goes through all of these stages. If it is successful, it will reach the final stage, where it will start resembling a bigger company more than a startup.
To develop your business, you can use different business models.
For more on business models and additional tips on building a successful startup, refer to the full book.
Key Lessons from “Lean Analytics”
1. Do Not Become a Slave to Data
2. The Five Stages of Startups
3. Find Good Metrics
Do Not Become a Slave to Data
Do not become too obsessed with analyzing data. What you want to accomplish is to be data-informed, but not become a slave of data.
The Five Stages of Startups
Find Good Metrics
Use good metrics that can help you evaluate your position and determine the course you need to take in order to succeed.
The best metrics are expressed in percentages, they are comparable and understandable.
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“Lean Analytics Quotes”Don’t just ask questions. Know how the answers to the questions will change your behavior. In other words, draw a line in the sand before you run the survey. Click To Tweet Don’t sell what you can make; make what you can sell. Click To Tweet Your job isn’t to build a product; it’s to de-risk a business model. Click To Tweet A startup is an organization formed to search for a scalable and repeatable business model. Click To Tweet If you’re going to survive as a founder, you have to find the intersection of demand (for your product), ability (for you to make it), and desire (for you to care about it). Click To Tweet
Our Critical Review
“Lean Analytics” will show you the right approach to evaluate both your online business, as your brick-and-mortar one.
It focuses on metrics and how you can use them in ways that they will serve you, instead of you becoming their slave.
We believe that all people involved in business in some way can make a use of this book.